This document provides information about calculating penalties and interest for unpaid Iowa income tax. It explains that taxpayers may owe a 5% or 10% penalty depending on whether their return was filed on time and if at least 90% of the tax was paid by the due date. Interest is charged monthly on unpaid tax amounts based on rates in the provided tax interest rate chart. Two examples are given to demonstrate how to calculate penalties and interest owed.

1. IOWA INCOME TAX
HOW TO CALCULATE PENALTY AND INTEREST UNPAID TAX
ON
Do you owe a penalty on your unpaid tax?
If you did not pay at least 90% of the tax you owe by the due date, you will have either a 5% or 10%
penalty, depending on whether or not you filed your return on time. Interest is not charged on penalty.
If you did not file your return by the due date and did not have at least 90% of the correct tax
paid, you owe an additional 10% of the unpaid tax.
Example: Your total tax liability for the year is $2,000. You have already paid $1,500. This is only
75% of what you owe. In addition, you did not file your return by the due date. Since you did not pay
90% by the due date and did not file by the due date, you must pay a 10% penalty. $500 x .10 = $50
in penalty charges. Your total unpaid tax and penalty is now $550. You must calculate interest on the
$500 and add it to the $550.
If you filed your return on time but did not pay at least 90% of the correct tax due by the due
date, you owe an additional 5% of the unpaid tax. Interest is not charged on penalty.
Example: Your total tax liability for the year is $2,000. You have already paid $1,500. This is only
75% of what you owe. However, you did file your return by the due date. Since you did not pay 90%
by the due date, you must pay a 5% penalty. $500 x .05 = $25 in penalty charges. Your total unpaid
tax and penalty is now $525. You must calculate interest on the $500 and add it to the $525.
Do you owe interest on your unpaid tax?
Any tax you do not pay by the due date is subject to interest charges. Interest is not charged on penalty.
Interest is charged on a monthly basis. Part of a month constitutes a whole month. Since interest charges may
change yearly, the following chart has been developed to easily calculate interest. The chart is updated each
January. See page 2 for an example.
TAX INTEREST RATE CHART
Interest on the unpaid tax is to be computed using the table below. To find the applicable rate, find the tax year
for which you are amending your return in the left hand column. Then go to the right until you reach the column
for the month in which the amended return is filed.
TAX YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2008 0.7 1.4 2.1 2.8 3.5 4.2 4.9 5.6
2007 7.1 7.8 8.5 9.2 9.9 10.6 11.3 12.0 12.7 13.4 14.1 14.8
2006 16.7 17.4 18.1 18.8 19.5 20.2 20.9 21.6 22.3 23.0 23.7 24.4
2005 25.5 26.2 26.9 27.6 28.3 29.0 29.7 30.4 31.1 31.8 32.5 33.2
2004 32.3 33.0 33.7 34.4 35.1 35.8 36.5 37.2 37.9 38.6 39.3 40.0
2003 38.3 39.0 39.7 40.4 41.1 41.8 42.5 43.2 43.9 44.6 45.3 46.0
2002 45.1 45.8 46.5 47.2 47.9 48.6 49.3 50.0 50.7 51.4 52.1 52.8
2001 53.9 54.6 55.3 56.0 56.7 57.4 58.1 58.8 59.5 60.2 60.9 61.6
2000 64.3 65.0 65.7 66.4 67.1 67.8 68.5 69.2 69.9 70.6 71.3 72.0
1999 74.3 75.0 75.7 76.4 77.1 77.8 78.5 79.2 79.9 80.6 81.3 82.0
1998 83.9 84.6 85.3 86.0 86.7 87.4 88.1 88.8 89.5 90.2 90.9 91.6
1997 93.5 94.2 94.9 95.6 96.3 97.0 97.7 98.4 99.1 99.8 100.5 101.2
1996 103.1 103.8 104.5 105.2 105.9 106.6 107.3 108.0 108.7 109.4 110.1 110.8
1995 113.5 114.2 114.9 115.6 116.3 117.0 117.7 118.4 119.1 119.8 120.5 121.2
1994 123.5 124.2 124.9 125.6 126.3 127.0 127.7 128.4 129.1 129.8 130.5 131.2
1993 132.3 133.0 133.7 134.4 135.1 135.8 136.5 137.2 137.9 138.6 139.3 140.0
1992 141.5 142.2 142.9 143.6 144.3 145.0 145.7 146.4 147.1 147.8 148.5 149.2
IOWA REVENUE (07/17/08)
1 DEPARTMENT OF

2. EXAMPLE 1 OF CALCULATING INTEREST:
You are amending a 2007 Iowa income tax return.
An additional tax of $500 is due.
You are amending in August 2009.
The interest rate to use is 12.0% .
The computed interest is equal to: $500 X .120 = $60.00.
TAX YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2008 0.7 1.4 2.1 2.8 3.5 4.2 4.9 5.6
2007 7.1 7.8 8.5 9.2 9.9 10.6 11.3 12.0 12.7 13.4 14.1 14.8
2006 16.7 17.4 18.1 18.8 19.5 20.2 20.9 21.6 22.3 23.0 23.7 24.4
2005 25.5 26.2 26.9 27.6 28.3 29.0 29.7 30.4 31.1 31.8 32.5 33.2
2004 32.3 33.0 33.7 34.4 35.1 35.8 36.5 37.2 37.9 38.6 39.3 40.0
2003 38.3 39.0 39.7 40.4 41.1 41.8 42.5 43.2 43.9 44.6 45.3 46.0
2002 45.1 45.8 46.5 47.2 47.9 48.6 49.3 50.0 50.7 51.4 52.1 52.8
2001 53.9 54.6 55.3 56.0 56.7 57.4 58.1 58.8 59.5 60.2 60.9 61.6
2000 64.3 65.0 65.7 66.4 67.1 67.8 68.5 69.2 69.9 70.6 71.3 72.0
1999 74.3 75.0 75.7 76.4 77.1 77.8 78.5 79.2 79.9 80.6 81.3 82.0
1998 83.9 84.6 85.3 86.0 86.7 87.4 88.1 88.8 89.5 90.2 90.9 91.6
1997 93.5 94.2 94.9 95.6 96.3 97.0 97.7 98.4 99.1 99.8 100.5 101.2
1996 103.1 103.8 104.5 105.2 105.9 106.6 107.3 108.0 108.7 109.4 110.1 110.8
1995 113.5 114.2 114.9 115.6 116.3 117.0 117.7 118.4 119.1 119.8 120.5 121.2
1994 123.5 124.2 124.9 125.6 126.3 127.0 127.7 128.4 129.1 129.8 130.5 131.2
1993 132.3 133.0 133.7 134.4 135.1 135.8 136.5 137.2 137.9 138.6 139.3 140.0
1992 141.5 142.2 142.9 143.6 144.3 145.0 145.7 146.4 147.1 147.8 148.5 149.2
EXAMPLE 2 OF CALCULATING PENALTY AND INTEREST:
You are filing your 2004 Iowa income tax return for the first time in December 2009.
An additional tax of $500 is due.
Calculate Interest
The interest rate to use is 40.0% .
The computed interest is equal to: $500 X .400 = $200.00.
Calculate Penalty
If you did not file the return on time and did not have 90% of the tax due already paid,
you must pay a 10% penalty on the tax due: $500 X .10 = $50. Total Your Final Payment:
Tax Due: ............. $500
Interest: .............. 200
Penalty: ................ 50
TOTAL DUE: ..... $750
IOWA REVENUE (07/17/08)
2 DEPARTMENT OF